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Learn How to Take Control of Your RRSP Investments

Taking Control of Your RRSP Investments

In the last few years many Canadian investors have suffered poor returns with traditional investments in their portfolio. As one might expect, this financial loss has been equated with a loss of confidence within the market. Another knock on effect of this phenomenon is that companies, in the midst of low interest rates and uncertain market returns, are finding it too risky to guarantee retirement incomes.

With the February 29th RRSP deadline now in sight, it’s clear that Canadians must conduct full research into their retirement investment options. Today I’m going to be focusing on a hidden investment opportunity that could help Canadians with their financial future – real estate focused Limited Partnerships.

Why Isn’t the Average Canadian More Informed about this Opportunity?

Simply put, there is no money to be made by financial services providers in recommending rental real estate. While those with market experience are actively targeted by investment companies for this type of opportunity, members of the general public will not learn about the benefits of investing into real estate focused Limited Partnerships unless they conduct the research for themselves. And that’s time that most hardworking Canadians don’t have available. With traditional investments being shaky, and fewer companies providing retirement security for their employees, an investment in rental real estate is considered to be a great way to ensure a long-term, continuous income stream. A recent article in the Financial Post highlighted the benefits of this investment strategy:

“Rental real estate has been described by some as the equivalent of a super-charged RRSP.

According to Harvard professor Niall Ferguson in The Ascent of Money, “The original property game we know today as Monopoly was actually invented back in 1903 to expose the unfairness of a social system where a small minority of landlords [took advantage of] the majority of tenants.

What the game of Monopoly tells us, contrary to its inventor’s intentions, is that it’s smart to own property.”

Real estate: A ‘secret’ tax shelter – Jason Health for the Financial Post

Perhaps the best investment mechanism for entering into the property rental market is through a Limited Partnership. There are two particular types of Limited Partnership: Growth-focused and Income-focused. Investors looking for higher-return alternatives to traditional RRSP investments will be using a growth-focused Limited Partnership whereby the vehicle makes most of its payments to investors at the culmination of the term.

What are the Inherent Benefits of Real Estate-focused Limited Partnerships?

When investing in Limited Partnerships, the General Partner will be charged with managing all day-to-day activities involved in the investment. For those that utilize Limited Partnerships as a vehicle to invest in the booming Canadian real estate market, this would mean the General Partner is in charge of all the day to day operations which would include locating and acquiring properties, planning and managing the rehabilitation of the property and managing the property management.

Investing in rental real estate through a Limited Partnership also means that the investor’s risk is only “limited” to the amount originally invested. They are not liable beyond that original expense, which can entice risk-averse investors that are used to investing in mutual funds that, while risk-limited, are also revenue-limited in recent times as well. Limited Partnerships are also fee-friendly, as fees that are paid by the investor are often far lower than other type of investment options. And because there’s a hard asset backing up that investment, investors maintain a level of stability in their portfolio that might be lacking within their current investments. Simply put – for the hands-free investor looking to capitalize on the strength of the Canadian housing sector, purchasing rental real estate through Limited Partnerships offers an opportunity to regain upward momentum in their portfolio. Many Limited Partnerships are also RRSP and TFSA eligible.

Proactive Planning is the Key to a Stronger Retirement Savings Plan

The best way to protect your financial future, as we all look to our retirement savings plans, is to be proactive and seek out as much information as possible about the various investment vehicles that are available.

By taking action now, Canadians can begin to plan for a strong and prosperous financial future after retirement. It’s a simple process to begin. Speak to one of our investment advisors and you’ll soon realize that the power to control you future wealth is in your hands.

Look for my article in the March addition of the Canadian Real Estate Wealth Magazine on newsstands shortly

Got RRSPs? Thrilled with the returns? Talk to us about Alternatives

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Print This Post Print This Post | Send To A Friend Send To A Friend | Posted in: Articles | February, 20, 2012

…the life-long Journey to true financial freedom is only chosen by a few. It is offered to everyone, everyone with the courage to believe that it is achievable, but not everyone will make the commitment and take the action that results in true change.​— Robert T. Kiyosaki

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